Netflix is hailed as one of the best streaming services, often being the biggest source of entertainment for GenZ. They started promoting password-sharing in 2015 and further posted “love is sharing passwords” to ensure that there was a buzz around their content but the menace seems to be growing as 35% of people viewing their content are freeloaders currently.
With a steep fall in revenue in the last quarter for the first time in a decade. They lost around 200000 subscribers in the first quarter and a million in the second. The cut-throat competition they are facing now makes it difficult to “chill” and it plans to adopt strategies it had refuted earlier. This makes it necessary to bring reforms and the Netflix Revamp is in motion with tests currently.
After a few pilot tests in Latin-American countries, Netflix is ready to implement policies globally to crack down on “password-sharing” in early 2023 as per a letter to its shareholders. In the test, a “home” was established considering the account's primary residence, and continued streaming at additional houses for longer than two weeks would prompt the account used to pay for additional homes.
The current feature of adding 5 profiles per account will start being charged next year. Basic plans allow for the addition of one extra home, standard plans can add up to two extra homes and premium plans can add up to three extra homes.
A landscape of plans previously offered by Netflix (techhive.com)
Netflix will detect homes being used through IP addresses, device IDs, and account activity. It is going to use AI and machine learning to determine if you are using a shared password. It will also ask you to verify your account through a confirmation code if it thinks you do not belong to the family account currently logged in.
Account-sharing will be monetized with an additional fee applied for sharing an account. Another feature will be released to grant subscribers the ability to add sub-accounts and a basic ad-tier plan will be launched to allow for cheap subscriptions backed up by ad revenue. A special profile-transfer option will allow the carry forward of all data- including watch history and personalized recommendations, from one account to another.
Viability remains a question as this will require multiple tests and corrections before being accurate. Account holders will be asked to verify devices linked to their account and they can use them while travelling. This radical makeover also results from a change in the streaming landscape as Disney surpassed Netflix as the market leader in July. Netflix also plans to tap into the video-gaming market following a severe competition.
“Today’s widespread account sharing between households undermines our long-term ability to invest in and improve our service,” said Chenyi Long, Netflix’s director of product innovation.
“Netflix’s decision to crack down on password sharing has the potential to tap into a significant revenue opportunity. However, our experts are sceptical about its chances of success both from a technical standpoint and in terms of the pushback from users, which has already been seen in [Latin American] markets.”, Third Bridge analyst Jamie Lumley said.
Netflix's COO stated that the employees have been extensively working to find a balanced approach between the customer-centricity pursued by Netflix for a long time and the revenue that they are earning for their valuable services as a business intending to run for a long time. A year of iteration will be followed by deploying the means considered necessary for revenue.
Although no streaming service has previously worked on bringing a halt to password sharing, Netflix might set a precedent. Once the competitors clearly review the reform, they might apply it to their own platforms.
The breakdown will first apply to serial abusers- a single account being used by 10+ users is not difficult to identify and the company will tread gently to ensure that they do not tag customers as abusers incorrectly.
Although this strategy is a see-saw that can go either way- numerous more subscriptions or discontent subscribers- it remains an essential move for the company to ensure continued operations.
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